Less than a month before a January 1, 2025, deadline for certain businesses to report their beneficial owners to the Financial Crimes Enforcement Network, a federal judge in Texas issued a preliminary injunction blocking enforcement of the requirement. The order states that covered companies nationwide do not have to comply with the upcoming deadline, unless the judge or a higher court reverses the order before January first.
The lawsuit, brought by the National Federation of Independent Business and several of its members, challenged the constitutionality of the Corporate Transparency Act (CTA), the 2021 bill that established a beneficial ownership information, or BOI, registry and the requirement for businesses to report. The plaintiffs argued that the CTA exceeded Congress’s authority to regulate interstate commerce, that it violates the First Amendment by compelling speech and infringing freedom of association and that it violates the Fourth Amendment by forcing the disclosure of confidential information.
The Court’s order is a preliminary injunction only and not a final decision; however, it does temporarily pause enforcement of the CTA. The decision will most likely be appealed and again, enforcement could resume if the Court’s order is overturned on appeal, or the Government ultimately prevails on the merits.
